Choosing a suitable provider might be time-consuming, with so many trading platforms on the marketplace. After all, you’ll be trading your hard-earned wealth, so you need to be sure that the trading platform you choose is the best fit for you and your financial objectives. The good news is that picking the most advanced trading platform for 2021 from the available free trading apps doesn’t have to be a chore if you use a checklist of essential metrics.
The following are the most significant factors to think about:
While you may be inclined to choose a trading app based on costs or accessible markets, the security of your cash should always come first.
This is due to the fact that you will be required to entrust your money to your selected platform. As a result, you should check to verify if any financial agencies license the supplier.
In the United States, FINRA and the Securities and Exchange Commission (SEC) will regulate the top online trading platforms. The FCA and ASIC of the United Kingdom and Australia, respectively, are two more influential bodies.
If you’re not convinced yet, consider the following advantages of using online trading platforms that are licensed and controlled by the bodies mentioned above:
- Your funds will be kept separate from the rest of your assets in individual bank accounts. This implies that the free trading platform cannot utilize your funds to fund its business or, more importantly, to pay off its debts.
- Regulated brokers must follow Anti-money laundering legislation. This implies that all traders who use the site will have to have their identities validated, which will help to keep criminality at bay.
- The applicable license issuer will examine the trading platform’s finances. This ensures that everyone trades in a fair and transparent manner.
Finally, picking an unregulated trading platform – or one that is registered in a dubious offshore location – puts your money in danger.
Investors of all types and sizes appreciate the online trading environment. While some of you may only be interested in buying stocks, others may be interested in trading futures or contracts. You’ll want to see if the service serves your preferred market.
The finest online trading platforms for newbies should trade in the following types of investments:
- ETFs, Index Funds, and Mutual Funds
- Stocks and Shares
- Commodities and Currency trading
- Bitcoin and Other Cryptocurrencies
By visiting the trading platform’s website, you may quickly determine whether your desired financial market is supported.
It goes without saying that the top online trading platforms have extremely low commissions. Platforms may offer a clear, transparent pricing system in some circumstances. However, we’ve come across providers who have a perplexing, unnecessarily convoluted cost structure. It can be tough to tell exactly how much you are paying as a result of this.
- Trading Commission
The trading commission charged by the platform is the most significant fee to consider. This can appear in two different ways. Some trading platforms, for example, charge a set cost. This implies you may pay $15 to purchase a stock and another $15 to sell it.
In some situations, you may be charged a variable cost. For example, the trading platform may levy a 1% commission on all buy and sell orders. So, if you purchased $500 worth of stocks, you would pay a $5 commission. Then, if you sold your stock when it was valued at $600, you’d have to pay a $6 commission.
As a result, look for trading software that allows you to invest without paying a commission. This means you won’t have to pay commissions or fees when buying stocks, ETFs, or other types of assets.
You don’t need to worry about the spread if you’re a long-term investor who plans to own stocks or mutual funds for several years. However, if you are a short-term investor wanting to buy and sell forex, stocks, or cryptocurrencies, the spread is quite important.
This is the difference in price between the buy and sell rates of your chosen asset for those who are unfamiliar. This is sometimes expressed as a percentage. However, when trading forex, the spread is described in ‘pips.’ On big pairings, brokers like IG offer spreads as low as 0.8 pips, which is quite competitive.
- Transaction Fees
Many brokers in the internet area demand processing fees when you deposit or make withdrawals, which may surprise you. The amount you pay – if you pay anything at all – will vary from application to application. Furthermore, you may be charged a fixed rate or a percentage depending on the amount you transfer.
- Other Fees
Besides the usual commissions, spreads, and transactions costs, there are a few other costs to be aware of when deciding on a trading platform. This includes the following:
- Inactivity Cost: If your account is classed as dormant, some trading platforms will charge you a monthly fee. This typically happens after a year of inactivity, although it might happen much sooner. If you have money in your trading account, you should always check this.
- Fees for Margin: If you intend to trade on margin, you must be informed of the financing rates charged by the broker. This is normally a percentage of the salary levied for each day the position remains available.
- Account Costs: It’s also a good idea to see if your preferred trading platform has any continuing account fees. If they do, it’ll almost certainly be every month.
Overall, there are hundreds of trading platforms to pick from these days, which is good. With this in mind, you should conduct extensive research to ensure that you choose a provider who is a good match for your requirements.
As an example, while some of you may be looking to concentrate mainly on cheap costs, others may be looking for a platform that provides access to a specific market or asset class, amongst other things.